The Notch signalling pathway is an evolutionarily conserved intercellular signalling mechanism that is essential for cell fate specification and proper embryonic development. We have analysed the expression, regulation and function of the jagged 2 (Jag2) gene, which encodes a ligand for the Notch family of receptors, in developing mouse teeth. Jag2 is expressed in epithelial cells that give rise to the enamel-producing ameloblasts from the earliest stages of tooth development. Tissue recombination experiments showed that its expression in epithelium is regulated by mesenchyme-derived signals. In dental explants cultured in vitro, the local application of fibroblast growth factors upregulated Jag2 expression, whereas bone morphogenetic proteins provoked the opposite effect. Mice homozygous for a deletion in the Notch-interaction domain of Jag2 presented a variety of severe dental abnormalities. In molars, the crown morphology was misshapen, with additional cusps being formed. This was due to alterations in the enamel knot, an epithelial signalling structure involved in molar crown morphogenesis, in which Bmp4 expression and apoptosis were altered. In incisors, cytodifferentiation and enamel matrix deposition were inhibited. The expression of Tbx1 in ameloblast progenitors, which is a hallmark for ameloblast differentiation and enamel formation, was dramatically reduced in Jag2−/− teeth. Together, these results demonstrate that Notch signalling mediated by Jag2 is indispensable for normal tooth development.